Lexmark Cuts Earnings Outlook, Shares Slump (LXK)
Printer maker, Lexmark International Inc. (NYSE: LXK) warned on Friday that it expects its earnings to fall in the fiscal second quarter, as its business was impacted due to unfavorable exchange rates and fall in demand from Europe. The company said that it expects revenues to dip by 12%in the second quarter which is much more than initial estimations.
Already, hosts of other tech companies have lowered their earnings outlook in the wake of slowing U.S. economy, but more particularly, stagnating Europe, which is reeling under debt crisis and lack of business confidence.
Following the announcement, Lexmark’s shares tumbled, falling as much as 17% on the New York NYSE: XRX) and Hewlett-Packard (NYSE: HPQ).
Shares of HP, the maker of omnipresent Deskjet printers, dropped by 3 percent to $18.77 its lowest level in a year, while those of Xerox fell as low as 3 percent on Friday. Meanwhile, shares of Japanese printer markers, Ricoh Co LTD and Canon Inc, also edged down on the Tokyo Stock Exchange.
According to Michel Holt, an analyst at Morningstar, since companies are resorting to cost cutting measures, and printing being the most crucial part of the business budget, it bores the maximum brunt among all other spending cuts.
Speaking to Reuters, Holt said, “When you see times of macroeconomic distress, printing is one of the areas most susceptible to changes in demand. Even if we have long term negative trends in printing, they can be exaggerated in the short run by economic conditions.”
At present, about 40% of LXK’s revenues are generated from overseas markets which include the Europe, Middle-East and Africa.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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